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Thursday, April 18, 2013

Waiting for the Germans is like waiting for Godot

He argues that by introducing Abenomics now instead of waiting for the German Federal elections in September, Japan is indulging in beggar-thy-neighbor bad behavior (since the Eurozone/ECB cannot react with fiscal and quantitative easing - German official monetary conservatism is tying their hands). However, if it waited until just before the elections, it would be a good international partner and not taking advantage of European ideological paralysis. The Eurozone would finally have an excuse (as if they didn't already have one) to promote growth and not have to kowtow to hypocritical German electoral sensitivities.

Why does waiting 6 months make Japan a good partner, and acting now is beggar-thy-neighbor? If stimulating growth and ending deflation would be a good thing in 6 months and the IMF & Co have been urging it on Japan for the last 20 years, why isn't it even a better thing to do now?

If the world has to wait for the German electoral cycle to play out, it is condemning itself to paralysis, since Germany has critical Länder and Bund elections every few months. Remember the first Greek bailout, which Merkel delayed (on a "those lazy Greeks who retire earlier than we do" platform) until after the elections in North Rhine-Westphalia (which her party still lost, and then she did the about-face on Greece everyone knew she would do)?

Waiting for the Germans is like waiting for Godot.

I say, screw the German electoral cycle and let's get on with the job of saving the world economy (which is ultimately even in Germany's own interest - when I last checked it was still living on Planet Earth and not preparing to run a trade surplus with Mars).

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About Me

I'm a research economist at UNU-MERIT (Maastricht, The Netherlands) and IIASA (Laxenburg, Austria) with a specialization in the economics of innovation, complex dynamics, economic growth and evolutionary economics. By the 2008 world crisis at the latest it became clear that macroeconomics, financial markets and economic policy cannot be entrusted anymore to mainstream economists. Hence this blog.